Deloitte brought together industry leaders to predict what the next three years could hold for the broker channel and wider housing market
There are several mortgage industry reports out there, but what makes Deloitte’s Australian Mortgage Report 2016 different is that it’s based on a panel of industry insiders.
These include broking giants such as Malcolm Watkins of AFG and Michael Russell, formerly of Mortgage Choice, as well as leading figures at various banks and non-bank lenders. They asked them to pick from various suggestions of how broking and the mortgage industry might evolve, and the threats it could face.
The headline result – that broadening the value chain capture was the next step for broking – is hugely interesting, in that it goes against the focus on digital in recent years (although this was still popular). It reflects the emphasis not only on diversification but on end-to-end service, from finding a loan to moving into a new house, which some brokerages are already offering.
Deloitte’s report also comes at an important point for broking. In May the MFAA announced that broker market share had reached 53.7% of residential lending. Deloitte’s panel suggests this could rise further, but there are threats, both from the economy and regulatory environments and from brokers being locked out of new fully digital mortgages.
PROPORTION OF MORTGAGES GOING THROUGH BROKERS
Deloitte asked its panel what proportion of mortgage settlements would come through mortgage brokers by 2019.
Encouragingly, three quarters of the panel predicted the proportion would stay the same or even increase, with a quarter of the panel predicting the proportion would top 60%. Brokers’ proportion of market share increased from 51.9% in March quarter 2015 to 53.7% in March quarter 2016.
Furthermore, a recent report by JP Morgan picked out refinancing as the industry’s new driver (see MPA 16.6), noting that brokers make up 75% of the refinancing market.
However, one quarter of Deloitte’s panel suggested that brokers’ market share would decrease to between 41% and 50%.
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WHAT’S STOPPING INVESTORS?
Deloitte has fl agged the importance of ‘digital warriors’ – those consumers who are willing to do more of the mortgage application process themselves in the hope of getting a better deal.
At face value, digital warriors threaten the broker proposition. However, Deloitte partner James Hickey believes brokers can engage with this channel. “It may be that the broker model evolves to be more of a supplementary model for those types of customers,” he said. These borrowers still seek reassurance that they’ve made the right choices, he explained, and brokers can provide that reassurance.
All this depends, however, on banks working with aggregators to make digital work equally well through the broker channel as going direct, Hickey added. With digital-only channels still in development, whether brokers could be locked out is still far from clear.
These include broking giants such as Malcolm Watkins of AFG and Michael Russell, formerly of Mortgage Choice, as well as leading figures at various banks and non-bank lenders. They asked them to pick from various suggestions of how broking and the mortgage industry might evolve, and the threats it could face.
The headline result – that broadening the value chain capture was the next step for broking – is hugely interesting, in that it goes against the focus on digital in recent years (although this was still popular). It reflects the emphasis not only on diversification but on end-to-end service, from finding a loan to moving into a new house, which some brokerages are already offering.
Deloitte’s report also comes at an important point for broking. In May the MFAA announced that broker market share had reached 53.7% of residential lending. Deloitte’s panel suggests this could rise further, but there are threats, both from the economy and regulatory environments and from brokers being locked out of new fully digital mortgages.
PROPORTION OF MORTGAGES GOING THROUGH BROKERS
Deloitte asked its panel what proportion of mortgage settlements would come through mortgage brokers by 2019.
Encouragingly, three quarters of the panel predicted the proportion would stay the same or even increase, with a quarter of the panel predicting the proportion would top 60%. Brokers’ proportion of market share increased from 51.9% in March quarter 2015 to 53.7% in March quarter 2016.
Furthermore, a recent report by JP Morgan picked out refinancing as the industry’s new driver (see MPA 16.6), noting that brokers make up 75% of the refinancing market.
However, one quarter of Deloitte’s panel suggested that brokers’ market share would decrease to between 41% and 50%.
WHAT’S STOPPING INVESTORS?
Deloitte has fl agged the importance of ‘digital warriors’ – those consumers who are willing to do more of the mortgage application process themselves in the hope of getting a better deal.
At face value, digital warriors threaten the broker proposition. However, Deloitte partner James Hickey believes brokers can engage with this channel. “It may be that the broker model evolves to be more of a supplementary model for those types of customers,” he said. These borrowers still seek reassurance that they’ve made the right choices, he explained, and brokers can provide that reassurance.
All this depends, however, on banks working with aggregators to make digital work equally well through the broker channel as going direct, Hickey added. With digital-only channels still in development, whether brokers could be locked out is still far from clear.
